Policy support to FPOs in the XII Plan

Krishidoot

The encouraging feedback on the benefits to farmers through

the membership of FPOs has generated a positive wave of policy
support to nurture and promote these institutions. The XII Plan
document approved by the Planning Commission, in the Chapter
on Agriculture, strongly endorses the promotion of FPOs as a
means of linking farmers to agri value chains. A working group of
the National Advisory Council (NAC) has also supported the
idea of promoting FPOs in different value chains as part of the
larger strategy to increase the income of small farmers.
Recognizing the centrality of FPOs to meet national agricultural
goals, Department of Agriculture and Cooperation, Government
of India, has issued detailed Policy and Process Guidelines for
Farmer Producer Organizations, a comprehensive compendium
of instructions, methodology and standard costing to encourage
State Governments to promote FPOs during the XII Plan by
deploying funds from the Rashtriya Krishi Vikas Yojana (RKVY)
window.
The Union Finance Minister, in his Budget Speech for 2013-14,
announced two major initiatives to strengthen the funding
viability of the FPOs:
1.
Government will provide a matching Equity Grant of
upto Rs.10.00 Lakh to double the share capital of FPOs.
2.
A Credit Guarantee Fund with a corpus of Rs.100.00
Crore will be created in SFAC to provide cover to financial
institutions which lend to FPOs without collateral.
These measures are expected to further boost the prospects
and viability of FPOs during the XII Plan period.fn;k tk ldsA

SFAC is now focused on creating wider linkages for FPOs to

reduce their transaction costs, improve access to technology
and services and ultimately link them to better market
opportunities for higher returns. One of the initiatives in this
regard is the launch of Krishidoot, an ICT backed platform
which will electronically network all the FPOs in the country
and leverage their collective bargaining power. Rolled out on
1st June, 2013, Krishidoot will offer FPOs a gateway to a wide
range of services through the simple medium of the mobile
phone.
Please visit our website for further details.

Farmer
Producer
Organisation
FPO
Small Farmer's Agribusiness Consortium
(Department of Agriculture & Cooperation,
Government of India)
NCUI Auditorium Building August Kranti Marg
Hauz Khas, New Delhi- 110016
Tel. : +91 11 26862365, 26966017
Fax : +91 11 26862367
Email : sfac@nic.in, Web : www.sfacindia.com

A pathway to link farmers to

value chains

Background
Member based FPOs offer a proven pathway to successfully deal
with a range of challenges that confront farmers today, especially
small producers. Overcoming the constraints imposed by the
small size of their individual farms, FPO members are able to
leverage collective strength and bargaining power to access
financial and non-financial inputs and services and appropriate
technologies, reduce transaction costs, tap high value markets
and enter into partnerships with private entities on more
equitable terms. With fragmentation of holdings due to
generational transfer unlikely to abate, FPOs offer a form of
aggregation which leaves land titles with individual producers
and uses the strength of collective planning for production,
procurement and marketing to add value to members' produce.
International and national experience in the performance of
FPOs makes a strong case for policy support to member based
farmer bodies, to significantly increase their power in the
market place, reduce risks and help them move up the agri value
chain.
FPOs can provide essential goods and services to the rural poor,
besides their own members, and contribute significantly to the
process of rural poverty alleviation. They are also increasingly
seen as an important link in the risk mitigation strategy to
overcome the challenge of climate change.They have been found
to positively impact research priorities through participation
and closer feedback to scientists, besides providing valuable
inputs to policy formulation by channeling the opinions of the
farming community. The role of FPOs in reducing costs of
financial intermediation for formal financial institutions and
more effective targeting of small producers for financial services
has also been favourably noted.
FPO Pilot Project
SFAC was mandated by Department of Agriculture and
Cooperation, Ministry of Agriculture, Govt. of India, to lead a
national pilot project to promote FPOs as a demonstration of

the benefits of building institutions of producers and their

integration in agri value chains. SFAC has implemented this
project since 2011, in close collaboration with State
Governments, civil society and technical organisations as well as
private sector companies.Working across 25 states, the project
has helped to mobilize approximately 2.85 lakh farmers in over
250 FPOs, the majority of which have been incorporated as
producer companies under Chapter IXA of the Companies Act,
1956.
Farmers have responded enthusiastically to the message of
aggregation brought to them by 21civil society institutions
which partnered SFAC in implementing the pilot project. Sitting
through thousands of awareness building and training meetings,
journeying to neighbouring districts and sometimes to other
states for exposure visits, sharing experiences, contributing
savings towards share capital, organizing technology
demonstrations, leveraging their collective buying power to
source inputs in bulk and carrying pooled produce to distant
markets, over a quarter million farmers have helped to anchor
the success of the project.
(Details of the FPO project may be perused on the link:
www.sfacindia.com)
The activities undertaken by the FPO are summed up in the
following diagram:-

Promotion of Farmer Producer Organisations by SFAC

(As on 31.3.2015)
fdlkuksa dh la[;k
S no.

Name of State

laxfBr

laxBu
f;k/khu

iathr

iathdj.k
f;k ds rgr
7

Andhra Pradesh

7000

Arunachal Pradesh

1750

Bihar

13295

4705

11

Chhattisgarh

13293

12707

20

Delhi

3535

Goa

1810

Gujarat

19047

953

10

11

Haryana

8408

3342

16

Himachal Pradesh

3733

1117

10

Jammu

3060

921

11

Srinagar

3120

960

12

Jharkhand

10009

13

Karnataka

25377

59123

14

68

14

Madhya Pradesh

83277

61723

48

96

15

Maharashtra

62278

29222

40

49

16

Manipur

1750

1200

17

Meghalaya

1970

1780

18

Mizoram

1000

1700

19

Nagaland

1750

20

Odisha

23263

15637

35

21

Punjab

6288

22

Rajasthan

40277

6223

26

12

23

Sikkim

1876

24

Tamil Nadu

11116

10

25

Telengana

23492

506

10

10

26

Tripura

2850

27

Uttarakhand

6004

28

Uttar Pradesh

27453

5547

20

14

29

West Bengal

58599

10901

59

Total

459680

225267

253

429

Input supply

Financial & Technical

(seed, fertilizer,

(Credit, savings, insurance,

machinery)

extension)

State Level
(Policy advocacy, explore
wider markets, strategic
partnerships)

Marketing Linkages

Training & Networking

Cluster Level (10-12 villages)

(Credit, inputs, technology,
capacity building, market
linkages)

(contract farming,

(HRD, policy advocacy,

procurement under MSP)

documentation)

FPO

kd laxBu dh la[;k

Village Level (Crop

planning, seed production,
demonstration, knowledge
sharing, aggregation)

Federation of KPCs

KPC
(1000 farmers/ 50
FIGs in each)
FIG (15 -20
farmers in each
group)

FIG

Kisan Producer
Co/Coop.

FIG